Raw transcript

Andrew: Before we get started, have you ever wanted to visit the Land Down Under? Australia is a hotbed of innovation and has a thriving entrepreneurial community. And the heart of that community is Fishburners. Fishburners is a co-working place in Sydney, Australia, which is home to the single largest community of entrepreneurs and business people in Australia. If you’re thinking of coming to Australia for a visit, or if you’d like to try working from Sydney, start your trip at fishburners.org. They have a range of membership options for all sorts of businesses and individuals, and they host regular events where you can connect with some of Australia’s most influential business people.

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Alright. Let’s get started. My name is Andrew Warner, and I’m the founder of Mixergy, home of the ambitious up-start. And today’s guest is Dan Caron. He built a multimillion dollar business, but he doesn’t want to talk about it. He doesn’t even want me to tell you the name of the business that made him all that money.

Dan: I’ve built several to be truthful.

Andrew: Several. Are you going to talk about any of their names?

Dan: Sure. Absolutely.

Andrew: Okay. But not the big one here that I have up on my screen. Let me finish with the intro. I do that too. When people interview me, I jump right into the intros. I like that. The final thing I want to say is when I asked you, Dan, before the interview started what’s a win for you, you said, “I want to teach people what I’ve learned” and “It would be nice if we could talk about MemberMouse,” which is a turnkey membership platform that people can set up in minutes. Right?

Dan: Absolutely.

Andrew: Why can’t we mention the name of the site that I have here up on my screen?

Dan: Well, we can mention it. The name is Attraction Formula. The reason I prefer not to is because I’ve spoken at many seminars, and people tend to rip off your businesses. It just invites unnecessary competition, but if people want to try, then they’re more than welcome.

Andrew: Before the interview started, I said, “I’m going to ask you questions about things we agreed you shouldn’t talk about, and you should be comfortable saying, ”No, I won’t answer it’.” That happened very quickly. I didn’t even have to ask you a question, and you said the name of this company.

Dan: No. It’s just how it was. People will try to rip off… If you have something that’s making a lot of money, they will copy.

Andrew: I don’t even want to pretend that that wouldn’t happen. People will, of course, copy it.

Dan: Yeah. It’s true.

Andrew: What does the company do?

Dan: We actually sell dating advice for men. So we try to hook up with the big dating sites like match.com and Plenty of Fish, some of the bigger sites on the net. And we teach men how to be relaxed and not screw up their chances with a girl. It’s kind of funny because it’s somewhat of a ridiculous business, but there’s such a large market. There are millions of guys out there, and we all want to be successful in our relationships. So, it’s a need for a lot of men.

Andrew: And this is how to pick up women? Or how to do well with women that you meet on the dating sites?

Dan: Well, it’s really up to the guy. My content guru, Paul Janka, was kind of a playboy, he was a player… He was on Dr. Phil. He kind of was a bad boy, and he turned it around. I can’t speak to his personal life, but he’s been with his girlfriend for a while. And he’s come a long way.

Andrew: Dan, everyone else who’s in this business is the guru who’s creating the creating the books, who’s teaching. And here you are. You’re not the guru. It’s this other guy who is. Why?

Dan: No, I think that that’s really critical to understand for people that are just coming up. Because I see this all the time. They try to be the guru. They try to be the content expert and the marketer at the same time. And to me, that’s kind of crazy because it’s so much work. Being a marketer, building a business, it requires so much time and so much energy. And really if you’re not an absolute expert in whatever it is that you’re trying to sell then I think you’re fighting an uphill battle.

Andrew: So what do we do instead?

Dan: Well, I think that it’s much, much easier to go out to Amazon or seminars and find experts. There are people that have bestselling books, they have seminars, they have television appearances, they have radio, they already have so much credibility and so much to offer. And if you want to start a membership site and you want it to be a seven figure membership site and you want it to really bring in some of the bacon, then go out and find that content. Find that expert. Then that allows you to kind of focus on being the marketer and being the business builder. You don’t have to wear two hats at the same time.

Andrew: That makes sense. You kind of got started in this. I want to know how you built up the – I’m asking so many questions all at once. Why don’t I start out with the numbers questions? How much money can you make with this business where someone else is the expert and you’re selling his content?

Dan: Well, the sky is kind of the limit.

Andrew: What did you make last year?

Dan: Well, I won’t speak to exact numbers. I have a few businesses. But the dating business itself did around two million which I think could do a lot better but it’s not about living between just a few-

Andrew: And that’s before affiliate payout?

Dan: Oh yeah.

Andrew: That’s not a bad living at all. How much do you net after affiliate payout and after payout to Paul?

Dan: Well, that’s classified.

Andrew: That’s where the line is drawn. I appreciate that. Is it more than a quarter million dollars to you after all these expenses? It is.

Dan: It’s up there.

Andrew: Okay. You kind of got started at 16 with a fake order process.

Dan: I did. I did.

Andrew: What is this fake order process that got you all excited about the possibilities of online marketing?

Dan: What I wanted to do was I wanted to see if someone would actually try to click an order button and buy a product. I had no idea. I was 16. I said, “Well what I’ll do is I’ll make an order button and then I’ll have it send an email that says, ‘We’re working on a product. It’ll be releases shortly.'” I remember sitting in my parent’s basement and being 16 and somebody was trying to order. And I thought, “Oh my god, this is unbelievable.” And ever since then I was hooked.

Andrew: What were you selling or kind of selling?

Dan: It’s a book of tattoo ideas actually.

Andrew: Really?

Dan: Yeah. Yeah. I noticed that there were a ton of searches for tattoo designs and I thought, “This makes sense. People are looking for ideas, tattoo ideas. So I’ll sell a catalog of tattoo designs.” And I sold that for a while. It actually paid for all my college expenses. It did pretty well. Once you’re hooked, you’re hooked.

Andrew: How did you write this catalog or book of tattoo ideas?

Dan: Well, I designed a few of them myself.

Andrew: You mean you hand drew them?

Dan: Yeah, I do graphic design also. And I hired an artist as well, because I couldn’t produce several hundred myself. It was just too much work. So I hired an artist, put together a book and that was it.

Andrew: And then how’d you get traffic to it?

Dan: I was doing SEO at the time. This was back when SEO was pretty straightforward.

Andrew: I see, [??] words and that’s it?

Dan: Yeah, just keywords and link and that was it. That was the basic formula.

Andrew: How big did you get the business?

Dan: It was doing several thousand a month. It was great because in college you have rent, and you have beer and pizza. And that’s pretty much all you spend your money on, right? So I’d go to the ATM and I’d pull out some money and I’d go buy some beer and pizza. And I didn’t have a job in college. I just got hooked on internet marketing.

Andrew: Wow. How big did you get the business? You know what actually, how much did you have in the bank after you graduated from the business you were doing?

Dan: To kind of give you full story. After I was hooked on internet marketing I said, “What can I do? How can I learn more?” And I went down to South Florida to work with Rich Schefren at Strategic Profits and we had done a couple of Jeff Walker style product launches and we brought down several million bucks.

Andrew: Wait. For your business, or you were helping him?

Dan: I was helping Rich . . .

Andrew: OK.

Dan: . . . build TG profit. I had over six figures in cash in my bank account. I was young. I was, like, 23. Something like that, 22, 23. And it was amazing. You read Think and Grow Rich. Everyone reads and you try to visualize and make a collage, or whatever it is that we need to do to kind of push ourselves to visualize that success. I would go to the ATM and I would look at the receipt being a kid, and seeing over a hundred grand in cash. It was a good feeling to be that young and to . . .

Andrew: You were doing product launches for Rich Schefren. Were you getting a cut of it? How did your bank account grow from that?

Dan: Yeah. I was getting a percentage.

Andrew: I see. Okay. And so what did you learn by working for him?

Dan: He taught me a lot. He’s a very driven guy. He’s very well-connected. He’s a ferocious reader. And he really taught me about priorities in business and how to think about what’s important to get to the next stage.

Andrew: Mm-hmm.

Dan: There’s a million things you can focus on in your business, but there are only a few things that are the bottlenecks at the time. When you really learn to focus on the bottlenecks, I think that it helps you grow your business.

Andrew: Can you give an example? What would be a bottleneck in an information business?

Dan: Customer acquisition. Right. If you don’t have customers, you don’t really have a business. So all of your efforts need to be on customer acquisition. I think a lot of people do all sorts of things, but really that should be your singular focus.

Andrew: Not even in creating the product, making sure the product works. It’s about customer acquisition?

Dan: Well, that brings up a good point. Something that has taken me 15 years to learn, and something that I wanted to share with everyone on this call is that I think one of the most impactful things that you can study are problems. Studying your customer’s problems and your prospect’s problems. It’s very basic. I’m sure everyone has heard this before. But, literally, I think that’s the most important thing. We make purchases because, essentially, we have problems.

Most people buy gas every day for their car. They don’t necessarily want to do that, but they have to do it, because they’ll have a problem if they don’t. And you can extrapolate that into information products, software products, and it’s critical that you understand the problem and you understand it well. And that’s going to help you learn how to acquire customers. Again, it sounds very basic. But to me, when I really, really understood that after selling thousands and thousands of products online, I think that’s just a fundamental truth and it’s something that you can’t avoid.

Andrew: So it’s understand their problems in order to sell to them, or also in order to develop the product and improve it?

Dan: Oh, it’s a direct correlation. You can’t solve . . .

Andrew: You know why I ask? One of my problems with the information product business is there’s so much A/B testing around the landing page. There’s so much creative thought around where to find customers, and how to get them to the site. But once the product is built, essentially, it stays the same. It might go through two or three iterations over its lifetime. But by the time the product hits the customer, you have their money in the bank, the information marketer’s part of the deal is done. And it’s time for him to move on to acquire more people. It seems like that’s pretty basic. That’s the way it works. Right?

Dan: Well, I think that’s a generalization.

Andrew: Totally generalization.

Dan: And everyone runs their business differently. But I think that the larger point is that if you want to be successful, you have to solve people’s problems. You know, that’s really what it’s about. That’s what business, I think, is about. It’s solving people’s problems. And you have to understand that that’s why you’re in business. And it’s going to help you create a more satisfied customer, and it’s going to help you grow your sales. It’s kind of a fundamental equation. So I don’t look at it as using problems to exploit people’s weaknesses. I look at it as making sure that you understand what someone needs and helping them find a solution to whatever that is. The better you can do that, again, the more customers you’re going to have and the more satisfied they’re going to be.

Andrew: All right. So then you start to notice some kind of product being sold online and done well. It’s the dating product, right?

Dan: Mm-hmm.

Andrew: Pick-Up Game [SP] is starting to pick up. You’re starting to see that people are selling how to meet women books and videos and seminars, right?

Dan: Sure.

Andrew: And what does that lead you to do?

Dan: Well, it’s not something that I wanted to be a guru in. It’s just not my interest. So I found a guy who was really good at it and who had a very unique voice, very strong writing, very controversial, and smart.

Andrew: This is Paul?

Dan: Yeah, he has a degree in physics from Harvard.

Andrew: How’d you find him?

Dan: He’s an Elite Tutor. I read some of his material. I was researching, trying to find a content guru, and I said, ‘This guy has an incredibly strong voice,’ and he’s a very, very strong and fascinating personality. And I thought this guy would make for an amazing guru, and he did. Again, he’s a very pragmatic type of guy, and I think that helps men with their challenges with women.

Andrew: I’m looking at his reviews on Good Reads. It looks like he has 38 ratings, 4.16 out of 5 stars, and this is for the book “Attraction Formula.” Do you publish that book?

Dan: Yeah.

Andrew: Lots of compliments here. All right. But back then you just saw that this was coming up. You found him. What’s the first thing that you did with him?

Dan: Well, I said, ‘We need to write a book. I need you to write a book.’ And he said, ‘Okay,’ and he wrote a fantastic book in about two months. We wrote a sales letter, put it up for sale, and (?) buying it ever since. But really I think what’s important for people to understand, and this is the second big thing that took me a long time to learn, is that in order to grow a membership style business, if you want to have a business that does over seven figures a year in revenue, you have to, in my view, use lifetime customer value as your metric. That has to be your critical metric. You have to understand how much each customer is worth and why is that.

Well, it’s because the Internet is a very fragmented and segmented place. I think it’s difficult for people to get traffic, and I think the only reliable way to get traffic is to buy paid media to buy paid traffic. And paid traffic is one of the hardest things to do as a marketer, as a business builder, because it’s challenging. There’s a lot of competition for traffic. So in order to be successful with that, you need to understand lifetime value. So how does that work? And I want to get into this, because if somebody had told me this years ago, it would’ve made my growth a lot faster.

Andrew: Okay.

Dan: Well, let’s just say that your customer is worth $120. You know that over several months they love your content, they stick with you for a few months, so you know that on average each customer is worth $120. Well, you can take that number, and you can back that out into every single front-end metric, your cost per click, your CPM, your affiliate payments, and it becomes a very, very useful tool to grow your business. Without it, if you don’t know that, if you don’t know your lifetime value, you can’t grow your front end, because you don’t know how much to pay per click, you don’t know how much to pay for a banner ad, you don’t know how much to pay for an affiliate payment. But if you work (?)

Andrew: Where does your revenue come from your customer? It seems like there’s this book. When I go to your website, the front end is the book. What happens after that?

Dan: Well, there’s a membership site where there’s seminar footage from Paul, and there’s additional up sales, additional products. Most of the revenue comes from our seminar. [??] seminar [??]

Andrew: So, the book just gets people indoor and then there’s a seminar revenue, where, it’s an in-person seminar?

Dan: Yeah.

Andrew: People fly out?

Dan: No. It’s footage of the seminar.

Andrew: Where he did it in person, where he recorded it, and we all get to watch online?

Dan: Sure.

Andrew: Okay. The first product was the book. Did you immediately build a second follow-up up-sell? Or did you –

Dan: Yeah.

Andrew: You did? What was the up-sell from the start?

Dan: It was a seminar. We went out and we filmed it here in New York City. It’s been a hit ever since. A lot of it is the [??]. Like I said, Paul is a fascinating guy and he’s a very eloquent speaker as well.

Andrew: OK. So you asked him to write a book. You recorded a seminar with him. You had your products. It’s time now to go and get customers. The first customers came from affiliate programs?

Dan: Yeah. That’s another thing I think is important…It’s New York City for you. I think it’s great to start with an affiliate program. What you can do is, if you don’t have any money to build a membership site, you can start with an affiliate marketing. You have to find good partners. You have to treat them well. You have to approach them personable-y. If you don’t have any money to start, that’s a good method to try. Right from there, I think it’s important to take your [??] revenue and start testing paid media as quickly as possible.

Andrew: How did you get your first affiliates?

Dan: Making phone calls, sending emails.

Andrew: I don’t know you well enough so I can’t tell if you’re nervous, or if you’re second-guessing yourself or saying the name of the company right from the start or if you’re feeling –

Dan: No, it’s just that I’ve been in this dating[SP] space for years. It’s not something that I think is very fascinating or interesting, nor do I think it’s necessarily the most valuable thing that your audience could hear. I want to deliver value for people. Everyone always thinks, “Oh Dan! We want [??] [??].” People are always fascinated by –

Andrew: It just feels too basic for you, you’re thinking?

Dan: Yeah. I don’t think that it’s…Yeah, I guess you can say that.

Andrew: Go a little deeper. You said people are going to copy you. Let’s assume someone copies you exactly, finds a guru and creates a book, records a seminar, has his two products and now says, “Hey, what Dan did was he went out and found affiliates. I’ll go find affiliates. I’ll cut them in on my revenue. Ba-da-bing, ba-da-boom. Everything is copied. It’s not going to work for them. Why not?

Dan: Because they don’t have the same voice that my guru does. He’s a very rare personality.

Andrew: You said the voice several times. I’ll get to what else didn’t work, but tell me what is it about the voice. What do you mean by that?

Dan: I would say that…Paul brings a unique perspective to the idea of…to the ideas related to relationships. He reads the Economist every week. He’s an elite tutor. He has 800 on all three of his SAT marks. I think that people…If you’re selling information products, the voice is critical. It’s not…

Andrew: By “voice”, you mean his attitude, his knowledge, his ability to communicate, his ideas? It’s not…

Dan: Right, exactly. It’s the ability to communicate ideas. Because what are information parts supposed to do? Where is value created with information parts? It’s the efficiency of the results that you can create for somebody. If I said, “I can teach you how to get rich in 1,000 years,” versus, “I can teach you how to get rich this weekend.” If you had a credible way to do that, which product is going to be more valuable?

Andrew: OK, obviously the weekend. We understand the need for the voice. Let’s suppose that they find someone who has that voice and interesting attitude. You want to watch him or read his material and you know what works because it has worked for other people. It’s still not going to be a successful business for them, even though they’ve copied you. Where else are they going to fail?

Dan: I think most people will fail because they don’t have a proved[SP] and business model. They don’t quite understand how a membership model or subscription model really works. Some people do and when they do, they have very large successful businesses.

Dan: Yes, but I don’t think enough people have been exposed to it. I think there’s a lot of noise around business building, you should use twitter, you should use Linkedin, or you should use Facebook advertising you know? You should do this or that and everyone’s trying to sell you their own way of making money on the Internet. And I think that there’s a lot of distractions out there, but if you look at the most successful businesses. Businesses like Ogora [?] where they [?] with [?] so I can only speculate what their earnings are but you know? It’s people’s claims, it’s north of 300 million a year and you know?

They use lifetime value as add-ups in metric which is they build their businesses. I think it’s also important you know? There’s a lot of ways that we can discuss growing a business and getting customers and I don’t want it to seem just tactical, but that’s the only thing that matters but it’s not. What matters in business is making sure you have a good product, making sure that you’re solving people’s problems.

Andrew: Okay. With that notion…

Dan: What that says…

Andrew: Lifetime value of a customer will take some work to figure out, but assume that they figure it out. That they know that they have an upfront sale that they make money from, that they have a monthly recurring charges and they know how long people are going to stay with them, they can figure out what a customer’s worth to them. Assume they have that, they’re still going to fail. What else are they missing?

Dan: If you have a high enough lifetime value and you can purchase traffic for less than that, you’re not going to fail.

Andrew: So I have Ryan Holiday going to teach a course for mixture G premium members about growth hacking. This is a guy who helped him whereas he come a best seller, he’s done work with American apparel and so on. He says that if we have a business that’s based on buying ads we’re going to fail because there’s always going to be someone who can pay more for the add even if that means they’re going to lose more money on them. In here you’re telling me the opposite. How do I reconcile the two points of view from people who are obviously both successful?

Dan: I don’t think that contradicts anything, he makes a perfect point. There’ll be somebody who can pay more money than you can for ads.

Andrew: Right.

Dan: And that’s really, that’s the truth. I don’t think that it, so the idea is lifetime customer value. If you have the highest customer value, if you can, if your customer value is you know? To start with the first example, if your customer value is $120 and you pay a dollar per click and you have a 1% conversion rate. Well you know? To get one sale it’s going to cost you $100 right? So you’re going to make a $20 profit off of that $100 ad spent.

Andrew: Right.

Dan: It’s very simple, it’s very basic. Now if somebody else comes along and they have a $200 customer value, what happens? What happens to that one dollar cost per click that you are paying? They’re going to bid that up.

Andrew: Right.

Dan: They’re going to bid that up to $1.50 and all of a sudden it’s going to cost you $150. Right? Under visitors you know? $1.50 that’s $150 and your customer value is $120. So you will lose money.

Andrew: Right.

Dan: But the other guy, who has a customer value of $200, he’s going to make a $50 profit. So now he can buy all of the ads and it’s a tipping point. You reach a tipping point where if you have the highest customer value, now you can get all the traffic in space.

Andrew: So now we’re talking about a business where only five competitors when, everyone else just can’t compete.

Dan: Right, exactly. You know?

Andrew: It seems like a pretty painful place to be.

Dan: Why do you say that?

Andrew: Because it’s hard to be the top five in anyone’s face and keep counting on it. And if in this place, and this situation, in this narrow you’re creating you’re saying unless you’re one of the top five you’re going to fail.

Dan: Right.

Andrew: Doesn’t it make more sense to find another way to grow your audience so that even if you’re not top five you can still make a profit and have a successful business?

Dan: Well it depends what your expectations are. Sometimes what your objective is. If you want to have a multimillion-dollar description business or multimillion-dollar membership business, that’s generally the model that is most reliable. That’s not to say you couldn’t do it any other way. But to me it’s the most reliable model that I’ve ever found.

Andrew: So then why are we worried about people copying you. If your lifetime value is going to be-, it’s going to be higher than theirs because you’ve figured out your model, you’ve spent a lot of time figuring out how to get people who buy the book to convert into a seminar. You’ve figured out how to keep people subscribed. Bring them on. What’s the risk then?

Dan: You know I’m not sure. It’s a valid question. It’s just it’s not something that I think people like to invite.

Andrew: Okay.

Dan: That’s all.

Andrew: All right, so if this is so important what’s the challenge that most businesses have when they’re trying to figure out the lifetime value of their customers?

Dan: Well I think it comes down to having accurate reports. Lifetime value is actually it’s kind of a slippery number. You might think, “Oh it’s easy.” You just add up all the payments and divide it by the number of customers.

Andrew: Yeah.

Dan: Sure, but over what time period? You have to start selecting a time period and you have to choose a sample and you need a bit of data. If you’ve only been in business for a month or two then it’s going to take you a year or two to actually nail down what your customer value is. You know, I would say to people, study lifetime customer value and look at all the different ways you can calculate it.

Andrew: How can I calculate it? I just realize that I was just asking a very generic question a moment ago as if I had it figured out and I’m asking you, “How can my audience who still hasn’t gotten to our level figure it out?” Then I realized after I fired off that question, I’m struggling with that too.

Dan: Well how do you calculate lifetime value?

Andrew: I don’t know.

Dan: You don’t know. So how do you grow your business?

Andrew: To be honest my focus isn’t on, “How do we get more customers in the door?” It’s, “How do we do better work for our current customers?” And so we spend a lot of time here figuring out how to pre-interview you in a way that will reveal information that will be available for the audience.

Dan: Sure.

Andrew: How to do the same thing in an interview or how to get guys like Ryan Holiday to teach a course and break down ideas in a way that people can absorb even if they’re just listening on an iPod or an iPhone while they’re running. But when it comes to growing our revenues, what I’m most concerned with is keeping my customers happy longer. And I have looked at different ways to figure out what a customer is worth to us, how long a customer stays with us. And it seems so easy. But dang, you’re right. It’s frustrating. We even switched to Stripe which I thought, “All right, their data is easily accessible. We can find someone out there who wrote software that will tell us how long a customer stays with us.” I haven’t found anyone. Even people in my audience who want to start new businesses have heard me complain about this have volunteered to build something for us. I would even pay them. Haven’t been able to figure it out. So how do we do it?

Dan: Yeah, there’s not a lot of software out there that will help you do it. You have to look at all the payments that are coming in from all your customers and you have to be able to segment it by source.

Andrew: That’s another – exactly.

Dan: You have to segment your lifetime value by source because you can have ten sales from one website and ten sales from another. But if those ten customers from source A are just quality customers, they love your content and they’re going to stay with you for two years versus the ten sales that came from site B, that only stick around for 30 days-. If you only look at number of sales, ten and ten, you might think that things are equal but they’re really not.

Andrew: You added another variable here. That makes it even tougher. Let’s assume that doesn’t exist and frankly for me it doesn’t exist. All my customers come from the same place. How do you figure it out? Here’s what Noah Kagan told me. I was out for a run with him once and I told him I had this issue. He said, “Everyone else is going to make it too complicated for you. Look at the last ten people who cancelled, find out how long they were subscribed with you and that’s your number. That will tell you how long people stay subscribed.”

Dan: Yeah. I mean ten customers, are they all from the same source?

Andrew: Yeah, with me you can assume they’re all coming in from the same source. Someone’s coming in to watch an interview of an entrepreneur or a business that they’re curious about.

Dan: So you don’t do any paid advertising whatsoever?

Andrew: No.

Dan: Well that’s a testament to your interviewing skills.

Andrew: That’s why we spent so much time figuring out who to interview and how do we get the right questions out of them. But let’s keep it that simple. How does someone figure this out?

Dan: You deliver a tremendous amount of value for your audience. I think that you could significantly grow your business with paid media. And then you could reach a lot more people and you could serve a lot more people.

Andrew: All right. First of all, I appreciate that, and we probably could. It sounds like what you’re saying is figuring out the lifetime value of a Mixergy customer is beyond the scope of this interview. What you’re saying is this is an important number for a business to keep . . .

Dan: Sure.

Andrew: . . . on top of. Figure it out outside of this interview. But know that that’s important. And frankly, Dan, for you, it was critical. You were stuck at $10,000 a month in revenue.

Dan: Right. I was stuck. I was sitting in my office and I was just frustrated. I thought, what can I do? I’ve been at this level for months. I’m just kind of just churning. Nothing’s happening for me. You try a lot of thing and they fail, and they don’t work. That’s when I said, you know what. I’m going to make a spreadsheet. I’m going to call it focus. Then I’m going to put in the numbers every single day, and I’m going to figure out exactly what’s wrong with my business. And that was a turning point for me.

Andrew: What numbers did you put into this focus spreadsheet every day?

Dan: I put in clicks, sales, conversion rate. I put in the cost of my media, and I tried to calculate my lifetime value as accurately as possible.

Andrew: I see. And you were just doing it with an Excel spreadsheet and doing it all by hand.

Dan: Yeah. Yeah, you can do it by hand in Excel. It will give you so much power. It’ll give you the ability to make decisions about your marketing budget. Where do you want to spend your money? Maybe you do want to spend it on Twitter. Maybe you find that people on Twitter are very social and they enjoy interviews. And that might be something for Mixergy.

Andrew: What you would do is, you’d say, I spent $200 on ads on OkCupid. That resulted in 20 customers. Today those customers are with me. The next day, you’d go back to that section of your spreadsheet and say, those customers are still with me. Those customers are still with me you’d write every day until you lost a few of them, and then you’d . . .

Dan: Yeah, yeah. Essential.

Andrew: And then you’d say, this is where I think my . . .

Dan: Yeah.

Andrew: . . . lifetime value is from OkCupid, and here’s how much I cost me, and I’ll know whether to buy or not. But that takes so long, Dan, that by the time you know your numbers, the environment changed so much that the ads could be more expensive or less effective, etc.

Dan: You get a handle on it. You get a handle on the numbers over time. It doesn’t come quick. You can’t get it overnight. You can sta- . . .

Andrew: How long did it take you?

Dan: You can start with an approximation. It probably took about three to six months. You can start with an estimate. You can say, well, this is kind of what I think. And then you continually refine, and you work towards a more accurate number.

Andrew: You told Jeremy Weiss in the pre-interview that that was the turning point for you.

Dan: Yeah.

Andrew: How big did the business go after doing $10,000 a month? The following year, where were you monthly?

Dan: Over six figures. Over a hundred grand a month.

Andrew: Right.

Dan: To me I don’t think that that’s that big anymore. But at the time, it was a lot.

Andrew: How old were you when you became a millionaire?

Dan: Well, I wouldn’t say I’m a millionaire. I have a very high income really.

Andrew: But you don’t have over a million dollars in the bank?

Dan: Well, I’m not going to reveal that.

Andrew: Okay.

Dan: But I have enough to live comfortably. I don’t think it’s necessarily about the money, per se. It’s about achieving what you set out to achieve. Have you read Think and Grow Rich? I imagine, probably.

Andrew: Yeah.

Dan: You know a lot of entrepreneurs read Think and Grow Rich and it transforms us. And to reach our goals is hugely fulfilling. The money, to me, it’s, I don’t know. It’s nice to be able to do things with family. That’s really what I like to do, spend my money on.

Andrew: Speaking of family, you had a loss early on. Moved to New York. You wanted to start this business. Use what you learned by working with Rich Schefren. And then what happened?

Dan: Yeah that was… My cousin. I’m an only child, so I’m very close with my cousins. The one that I was the closest with, his name was Shane. And he was actually killed by a train. And I was on vacation at the time. I was on the West Coast, and I got phone call from my father, and he was crying. And he said, “I don’t know how to tell you this, but Shane died. He was hit by a train.” And it was a really bad period for me. I just started my business, and I went into a really bad depression.

Andrew: What does depression look like for you, Dan?

Dan: For me?

Andrew: Yeah.

Andrew: Well, it means I’m not active, and I wasn’t mentally engaged. I wasn’t in any flow states around…

Dan: Where was your mind? Was it going to a place where you said, “Everything just stinks. I’m going to die soon. What’s the point of living?” What do you think of when you go into depression?

Andrew: To me it’s more of a sadness that people that I love are no longer with us. That, to me, is a very difficult thing to deal with. When you love somebody, and they’re not there, it’s just… It’s like the George Harrison song, “Isn’t It a Pity?” To me, it’s unfortunate if somebody dies before their time.

Dan: So you were depressed about it, you were just starting this business… What happened to this bank account that I was trying to count the money in earlier?

Andrew: Well, I didn’t pay any attention to it. I just kind of zoned out, really. I had a friend say to me, “You’ve got to get over it.”

Dan: How do you get over it?

Andrew: Yeah, at the time, I almost wanted to hit him. He’s a good buddy of mine, but I was like, “I’m going to deck you.” But then a couple days went by, and I realized he’s right. This stuff happens. It happens every day. There are people in Syria. Awful things happening around the world, and it’s not necessarily a unique experience to me. It is something that you have to learn to process.

Dan: How?

Andrew: It takes time.

Dan: To me if often takes a big blow that makes me have to get back, or something good that suddenly happens. So it’s either I lose everything, I’ve got no money in the bank, and now I feel like, “Boom, I’ve got to go and do something.” Or it’s something just went really well. I met this girl, now she’s into me, life is good, I don’t know why, but I’m feeling happier… It’s one or the other. It’s either hitting rock bottom or just being lifted into the air into cloud nine somehow. What is it for you? What was it for you?

Andrew: I think being in the moment. We only have the now. So, being in the moment with friends and family…

Dan: How did you get to that point?

Andrew: It brings you back. It brings you back.

Dan: I see. So you just accepted invitations to go and hang out?

Andrew: It took me at least three years to be able to really work again at my full potential. I’ve read different things online that very tragic losses like that, deaths, it can take several years for us to really process. For me, it was seeing my nieces and nephews, my cousin’s kids… You just get out and realize, “Hey, life goes on. You have to make the most of it.”

Dan: You have kids now?

Andrew: No, I don’t, but I love my cousin’s kids dearly.

Dan: Are you with someone now?

Andrew: Yes.

Dan: Did you meet her using the Attraction Formula?

Andrew: Kind of. The premise is when you meet someone as a man, you should feel confident to ask someone out on a date. “Hey, let’s grab a coffee or a drink some time. What’s your number?” A lot of guys, find that to be very intimidating.

Dan: I did for a large part of my life, and I have to tell you, a big part of my confidence comes from having mastered that. Having gotten to a place where I can feel OK about doing it. I don’t do it anymore. I’m married. But mastery maybe it’s the right-

Andrew: Alright.

Dan: Yeah.

Andrew: But mastery maybe isn’t the right word because it’s also feeling okay when I can’t do it. It’s also feeling…

Dan: Right.

Andrew: … Like it’s not the end of the world if I didn’t, I’m not back to being that loser again if for some reason I missed an opportunity.

Andrew: Were you a big dork in high school the way I was? I mean your building websites for small businesses at 15 or 14.

Dan: Yeah I mean I was definitely a computer dude, I wouldn’t say I was the geek. I mean my parents are both very cool people and my dad is always in band and he taught me music and how to play guitar and you know? Guitar rods and stuff like that so…

Andrew: And when he saw you sitting and studying computers and figuring out how to inch out another penny from your ads, would did he think?

Dan: I still wonder where I came from, but I you know? They always supported me you know? They bought me computers when I was really young. I wanted to do movie special effects, I was always loved industrial lightning and magic so George Lucas special-effects company. Not so like what I wanted to do, I say how do I do that? And my father said well they use computers, they make you know? And I said all man I need to get one of those.

Andrew: So here you are a guy who’s figured out how to create info products, and you figured out how to find someone, how to buy ads, how to grow your revenue per customer, etc. And then you go off and you don’t launch a software company, you partner with one that already exists with Member Mouse.

Dan: Yeah that’s…

Andrew: How did that happen?

Dan: That’s what I’m saying. You want to find people who offer tremendous value, you know? And Eric Turniston [?], The founder of Member Mouse. I was using his software to run my dating business, I’ve been using it for about a year and a half and he said hey you know? You really seem to know what you’re doing when it comes to marketing, do you want to come on board as a partner and member by us? I said yeah, I would love to because you know? He’s a fantastic, fantastic programmer. He built systems for Walmart, British Airways, Sony pictures, Barnes & Noble’s.com you know? And again it speaks to the idea of if you want to have a seven figure business and a membership business per se, I think you have to find someone who offers tremendous value.

Andrew: So he was building the software and he had the valuable product, you knew how to market it and that’s why the partnership happened?

Dan: Yes, you know?

Andrew: How much of the business do you get when you come in after it’s launched?

Dan: Well, that’s confidential but I have a significant share of the business.

Andrew: That’s kind of 50-50, are we talking about you basically bought it out? Or do you consume…

Dan: We’re close to that arrangement I would say, I’m not quite but we split you know? Three years of blood, sweat and tears and a lot of coal. So it’s about 50-50, but it approaches that.

Andrew: I use WishList all my site, but the other day this guy Stephen Robertson. I’m looking for my e-mail from him, he says hey I checked out WishList because you recommended it but I ended up going with Member Mouse as its feature set and pricing model made sense for our business goals and it has tight integration with BB press as well. I wish you would have been a little clearer about what, well maybe actually an e-mail rather a keeps it short, but now that I got you here. I’d love to know what he means by the features that. What about it profile? So tell me what is it about Member Mouse that drew you? What was the feature set that made you say I got to have this?

Dan: Well it wasn’t the feature set per se, I was really sold on Eric.

Andrew: On Eric?

Dan: Yeah, as a person. He’s a very, very smart guy and he has insights into building software, enterprise level software that I didn’t see anywhere else. I think you know? After sitting down and talking with him and then using the software in my own business you know? I knew, I knew that this was great stuff. You know? If you go to MemberMouse.com and you watch the videos on the sales page. Did you get a chance to do that?

Andrew: No.

Dan: If you watch those videos you’ll hear Eric’s voice and you’ll hear the certainty in his voice that you know? The software that he’s built is just, it’s rock-solid. And you know? That’s what people need, they… One of the things that I realized when I came on board to do the marketing is that well, what do people want from their membership software? Well they want reliability, flexibility and skilled ability possibly and scalability on any set of years too. Really those are kind of the main hot buttons.

Eric, coming from an enterprise background, really delivers on the scalability side. You run a successful site, so I imagine you start to see how small changes in the business processes can affect your customer service. They can affect your retention. They can affect a lot of things about the customer experience. You need to have flexible, robust software to manage on both your sales process and your member management.

Andrew: So here’s what you told Jeremy in the pre-interview, which is the same thing you said here in the interview, which is you want to figure out peoples’ problems. You want to study them. So we asked you in the pre- interview about how you did that with Membermouse. And what you did was you went and had conversations with a few people. Who are they?

Dan: They were customers that Eric had on board, friends that I knew in the internet marketing space. Kristen Arnold works for Jeff Walker. I’m friends with her. I said, “Kristen, you guys have membership software. What is it that frustrates you? Tell me, what do you need? What is it that you need?” And again, it’s a very basic, basic principal in business and in marketing, but ultimately, I wanted to hear from people who use membership software, “What is it that frustrates you?” And you turn those into futures, and you turn that into your marketing material. Now I think you remain relevant in your marketing. That’s how you stay on point.

Andrew: Give me an example. What did she tell you that you didn’t know, as a guy who’s already run your own membership site, who’s been studying this stuff for a long time? What could talking to her teach you?

Dan: It’s about engagement. She said, “Well, I need to see how many times they’ve logged in, which pages they’ve accessed, which pages are the most popular.” Because sometimes people will say, “I never logged in.”

Andrew: And you want to see that they did log in.

Dan: It’s not that you want to get in a fight or anything, but it’s engagement data. Which to me, I never used engagement data per se, but to her, that was important. Seeing which pages people enjoy the most, things like that… We re-roll those into features. Again, it’s very basic, but it’s critical. It’s fundamental. It’s fundamental to have that conversation. Because you may think that you know what somebody needs, and you might think that you have a fantastic product, but if you don’t get feedback from people, it’s easy to miss the mark.

Andrew: One of the challenges with it is that it has a long sales funnel. People don’t just land on the page they might with a dating site and say, “Yeah, I’ll go buy it.” Because it has to integrate with their site, they might want to try a bunch of other options, they might want to decide whether they’re even going to do membership or not. It takes a long time. How do you nurse that lead through the long sales funnel? What do you guys do at Membermouse?

Dan: Well, we try to show people how easy it is to use. We have a 30 minute walkthrough, which basically you can learn pretty much 90 percent of the platform. Software can be intimidating. You don’t want to think, “Oh man, I have to learn all this, and it’s going to take forever.” And one of the things that we learned from talking with people is that they want to be able to get started quickly. They don’t want to be a programmer. They just want to be about to take their WordPress site and turn it into a membership site. There’s actually a video where Eric demonstrates setting up the site and integrating a payment gateway and getting to a sale all in under… I think it’s a minute and a half or two minutes. It’s under two minutes. It’s ridiculously quick and easy. And that’s what we try to do. When people can see, “OK. I can get up and running quickly. I can start my membership sight.” That’s going to help them be successful, and that’s going to help us retain them as a customer. So that’s what we do.

Andrew: One of things that you’re responsible for, one of the things you even did when you partnered up was write the copy.

Dan: Yeah.

Andrew: Where do you learn how to write copy that converts?

Dan: [laughs] Many years of trial and error and a low conversion rate.

Andrew: Is it just trial and error or if there’s something…

Dan: No, no.

Andrew: … Taught you.

Dan: You know I read a lot of books on copy but I remember at one point in the dating business you were going to spend you know? Several hundred thousand dollars on media buy and I’m sitting there going like I have no idea why people buy stuff. Like I’m a marketer, I went to college for marketing and like I don’t know why anyone buys that. Like why do people buy stuff? And I just started searching and eventually just started asking myself questions. Why do I buy health insurance? Well because I needed you know? Why do I need gas? Well I needed or I’ll… So I then I came up with problems and then you know? I said okay that’s the core, problems.

So how do you do that? Well, you talk to people, you ask them what their problems are. Ask them what they need and that’s how you write copy by talking to people and asking them what their problems are. There is a very, very narrow channel that you have to be on when you’re writing sales copy and if you slide off that channel the conversions going to drop to zero. And what does that channel? It’s relevancy, it’s relevancy to their prospects needs and if you’re off that mark it’s not going to convert and…

Andrew: So what’s the needed member mails?

Dan: Well our customers need flexibility. They need to be able to adapt their business ideas to a piece of software that’s going to be flexible enough to accommodate what they want to do. Because a lot of membership software, it’s kind of a, it’s in the box and you kind of our stock to the process that they designed for you.

Andrew: Yeah.

Dan: And Member Mouse gives you flexibility to adapt all kinds of different business models and that’s what people need, the need…

Andrew: But I’m looking at this sales page, I’m trying to figure out, I’m trying to see your thought process and the writings and the layout on this page. And what I’m picking up on is you’re saying the big need that people have membership sites have is they have a vision of how they want to lay out their contents and the fresh ration that they have is other software forces them to change their vision to accommodate the software. And so what I’m going to do with this layout, with this presentation is say you can have as much of your vision as possible because we are very flexible. Is that it?

Dan: Yes, that’s very much. That’s very accurate.

Andrew: Okay but it’s…

Dan: It’s also easier to use. I mean, you know? Software should be easy to use because otherwise you’re not going to get anything done. So we try to focus on ease-of-use and flexibility.

Andrew: I wanted to call this, let me see. I take it back, no. I wanted to call it a plug-in and I didn’t see plug-in and the headline, but it’s on the site 28 times. Right? Why is plug-in so important that you guys have repeated actually 27 times on the lining page?

Dan: Well it is a WordPress membership plug-in, you want people to know that if you use WordPress this is you know? One of the premier membership plug-ins so I don’t think that there is a conscious effort to do that, I think that’s just a natural results of the nature of the product.

Andrew: Okay. Where else can we learn how to be better copywriters?

Dan: That’s a good question. I think… I think people make it out to be a very mysterious process and a very daunting process and a very, very masters and there’s these legends who can just weave words into gold and it’s really a mythology around copyright that I mean I certainly thought into in the past. And I think probably a lot of people still buy into and I think if you can let go of that and you can start thinking about your prospects and thinking about their needs, then it’s not some magical process that you have to go into a cave and just you know? Torture yourself and drink 20 cups of coffee a day.

You know I think if you really sit back and say, “Why would anyone want to buy this,” and if you focus on that, and you focus on presenting your solution as relevant to their needs, you don’t have to be a wizard copywriter. You can have phenomenal copy that’s going to convert very, very well. It doesn’t need to be hypey. It doesn’t need to be sensational. None of that. That doesn’t even help your case. In most cases, it can hurt you. You have to be relevant, and I think if you focus on relevancy in solving urgent, widespread problems, your conversion rate on your copy is going to go through the roof.

Andrew: You wrote the MemberMouse.com website?

Dan: Yes.

Andrew: The sales page? So here’s something that I’ve seen other people do. There is a testimonial section in the middle of the site.

Dan: Sure.

Andrew: Martin Wilson is on there. He thinks after spending six weeks evaluating different membership plug-ins, he picked Member Mouse. Tyler Sorenson is on there. He thinks it’s well built, stable, easy to use. And another user on there is Dan.

Dan: Yeah. Well, I was a client. I had given that testimonial in the prior year before I was a partner.

Andrew: Okay.

Dan: I mean, some people know me, because I work with Rich. Not many people, but a few people do, and that was in use before I was part of the business.

Andrew: And I’ve got a good photo of you there. I told you before we started that we need a better photo of you. I’m going to take the one from the testimonial. Hey, you e-mailed me, and you said, ‘Hey, I think I’d be a good guest.’

Dan: Yeah.

Andrew: Now that we’ve done this interview, and I said at the top of the interview that you wouldn’t give me the name of the business, and then you gave me the name of the business, now that I’ve pointed out this testimonial in the middle of the site, do you regret doing the interview?

Dan: No. No.

Andrew: Why not?

Dan: Well, this has been fantastic. I think that people that engage and ask tough questions, I think that that’s the most important thing in the world right now. I mean, I love Jon Stewart. I absolutely love The Daily Show, because when Jon gets a guest on, no matter who it is, what side of the political aisle, he asks tough questions, and he digs and he digs and he digs. It’s so critical that we do that and that we continue to do that, because we have to get to the truth of the matter, we have to get to what’s real, and that’s what you’re doing. I think that’s why you’ve been so successful at Mixergy, is because you push and you dig and you engage. That’s tremendously important, especially in journalism, in media. It’s critical.

So, no, I mean, I didn’t really want to focus on the dating business, yeah, it’s an interesting story, but I don’t think that that’s where most of the value in what I can offer people is. I think that the tactics and the strategies of growing your business, using lifetime customer value, that’s what was important to me and to try to share that with people. So, no, I mean (?)

Andrew: I wanted to talk to you about that on camera in the interview, because I think the audience sometimes winces when I ask certain questions, and I’m getting this reputation for being a bulldog or pushy, or I don’t know what. It’s a very fine line, where I have to pull as much as I can out of the guest without trying to insult the guest. The goal needs to be to educate the audience and to take care of the guest’s needs without going too far. It’s a fine line and most people are so afraid of walking that line, and, frankly, I sometimes am, too, that they stay away from it.

Dan: Oh, come on, we’re all adults here.

Andrew: Oh, you think? In fact, before I said on camera that I do not edit my interviews. I think it’s one out of five guests would call me afterwards, or e-mail me afterwards, and ask me to edit certain things out. It’s because not that there’s any damage to their business, but because they’re just nervous, they’re just afraid. And I’d have to get on the phone with them and spend time explaining to them, ‘Believe me, your business is not going to go under because you said that people could compete with you.’ ‘Believe me, your voice didn’t go high pitch over there. It’s okay. You still sound respectable. People still trust you.’ That would take forever, and I guess we’re all . . .

Dan: It’s great. Keep doing what you’re doing. I mean, you do a phenomenal job.

Andrew: Let me say this to the audience, and then I want to ask you one final question that people have asked to ask . . .

Dan: Sure.

Andrew: . . . and I haven’t asked enough. I’ll say this, if you guys want to follow up, there is a page on Mixergy where you can follow up on anything that we’ve done.

Dan: Mm-hmm.

Andrew: And it’s called mixergy.com/find. And I would suggest that you type two things into it. First thing is, if you want to learn more about membership sites, type in the word membership, and you will see case studies of people like Billy Murphy of BlueFire Poker who talks about how he built the membership site. You will see courses by people like Noah Fleming of Membership Black Box who teaches how to increase your retention. That’s his focus in life, Noah Fleming.

If you could sit down with Noah Fleming over dinner, or have him come over to your office and teach you how to increase your attention, it would be ideal. If you can’t do it, second best is to have him teach you online. And if you go to mixergy.com/find and type in membership, you’ll see how he teaches this stuff.

And we have multiple courses in interviews in there. Here’s another thing that I suggest you type in there. Since we talked a little bit about copyrighting, type in copyrighting. And there’s a guy named Neville who, if you can watch his video, you are going to get the spirit of his copyrighting. I urge to go and find Neville’s course on copyrighting. Actually, we have a couple of things. We have him do an interview, and I have what’s called an action video on non-boring copyrighting.

And it’s called an action video because I partnered up with Noah Kagan on that one, and Noah called those videos action videos so we went with that. All right. So it’s all on mixergy.com/find. You don’t have to have a membership in order to learn from old interviews. The transcripts are there. I pay a transcript company to turn around my transcripts within a couple of days because I want people to be able to go in and read and learn from every single one of the interviews.

If you want to take it to the next level, you get a premium membership, you’ll get to download and listen to or watch all the interviews. But go to mixergy.com/find and you’ll be able to get access to all those interviews, and hopefully to the courses too if you’re a member. Dan, here’s a question. I keep forgetting to do this, but people want to know a book recommendation from the guests.

Dan: Sure.

Andrew: And I’m surprised that this is such a big need, but I have to acknowledge that it comes up often enough that it’s a big need.

Dan: Yeah.

Andrew: So what recommendations do you have?

Dan: I would say The Brain Audit.

Andrew: The Brain Audit? Never heard of that one.

Dan: The Brain Audit is a phenomenal book. Phenomenal. It talks about how the brain works, and that the brain really is 24/7 just seeking problems to solve. Oh, there’s danger. You know, it’s all that evolution. But that’s the fundamental operating system of the brain is problems and solving problems. And that’s why it’s so critical that your copy connects with people’s problems because it will get their attention and it will convert them. So The Brain Audit . . .

Andrew: The Brain Audit, Why Customers Buy and Why They Don’t. It’s available on Kindle on Amazon.

Dan: Yeah. It’s phenomenal. I think with that book, you don’t need anything else to learn how to write copy. I think that’s the only thing you need. I’m kind of a reductionist. I would say that if you just studied that, and forgot about everything else, you could be successful. I think it’s a brilliant book.

Andrew: I’m buying it right now with one click. There, wow, I have to enter my password. I entered my password and sent it to my Kindle Fire.

Andrew: There it is. Look at that. All right. Oh, and look at this. I can also deliver it to another device which is the other thing that I wanted to do. I wanted to send it to my iPad, because lately I’ve been reading on the iPad more.

Dan: Yeah. Mm-hmm. Been there.

Andrew: All right. Were you going to say another book?

Dan: I would say Breakthrough Advertising by Dean Schwartz. I mean that’s a very classic recommendation. What I think is important about it, and I don’t think many marketing books really talk about this, he talks about marketing over time. What stage is your market at? Where are you as a vendor? Where are you coming into the market? Is it early-stage market, middle of the market, late? Are there mature competitors? And that’s something that’s just takes years to understand. Markets are dynamic and they exist over time. How does your profit solve a problem, but how does it exist in the context of time. Kind of defined. That’s my big secret.

Dan: Let me give people a big tip on that one. I tried to buy that off of Amazon and all they had was the hardcover, and I can’t stand reading from paper. Usually what I do is I have my books cut and scanned so that I can read them on digital and have all the notes on them. And Amazon only sells the hardcover for what? $93 bucks. But, apparently you can get it on Archive.org and I think Scribd for free in PDF and text format and all these other options. So if you’re going to Amazon as a result of this interview and you’re thinking of buying it, you might want to just go and look online for the free version of it. There it is. I’m looking at it on Scribd and it’s apparently all free. I downloaded it myself so I won’t even need to confirm right now.

Andrew: Yeah.

Dan: Uh, all right. Dan, thank you so much for doing the interview. If people want to follow up with you, they can go to Member Mouse and see the software that you’re backing and you’re part of. They can go to your dating site and buy the book. But that’s not a way to connect with you. Are you online? Are you on Twitter? Are you on Facebook? Are you anywhere?

Andrew: I’m on Twitter, but I’d probably say if people, if your audience has questions, I can just respond in the Mixergy..

Dan: Comments.

Andrew: …comments. I’d be happy to. You know, you can reach me through Member Mouse as well.

Dan: What would you like them to ask you in the comments? What would feel like, what kind of questions would make you feel engaged and let you know that people are learning from you?

Andrew: Yeah, I would like people to think about the problem that they’re solving. You know? I would like them to say, well, “I talked to five people and I learned that they need this. How do I translate that into a product?” Or, “I think that my, people have told me that my product solves this problem. What’s the best way to turn that into, you know, a headline or a sales letter?” You know? Problem, solutions, and lifetime, customer value. Using lifetime customer value as the basis for growing your business.

It gives you a business model that’s manageable, that allows you to make decisions, allows you to calculate how much money you should be spending on all of your front end media, your affiliate stuff. So anything related to problems, solutions, and lifetime customer value. That’s really, that’s it for me. That’s like, you know, that’s the bread and butter of a 7-figure membership business. So I would love to chat. I mean, anything else. If people are going through hard times, or they lost somebody, you know, I’d be happy to talk about that too because, you know, that stuff can be difficult.

Dan: Yeah. Well, thank you for being open about that…

Andrew: OK.

Dan: …and telling us about your business.

Andrew: (?)

Dan: Thanks, Dan. It’s great meeting you.

Andrew: OK. Take care.

Dan: Thank you. Thank you all for being a part of it. Bye, guys.

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http://www.stephaniesammons.com/ Stephanie Sammons

Andrew I am intrigued by how often you stumped him. This was a strange but compelling interview. For me, it was the tipping point to go premium with you because of your intelligent line of questioning. It was proof to me that you will get to the real value. You rock.

http://www.salesprocessengineering.net Justin Roff-Marsh

Andrew

Dan’s totally right. You should be running PPC campaigns. You have the perfect keywords — your guest’s names.

It would be worth it even if it’s a break-even proposition — for the market intelligence you accumulate.

Justin

http://www.salesprocessengineering.net Justin Roff-Marsh

To calculate lifetime value, you need cohort analysis. Think of a normal race, versus a time trial. Subscribers are like the latter — they all depart from the start line at different times.

You can’t analyze the group until you normalize all start dates (convert subscribers into a cohort). This is easy in practice. If you subtract each subscriber’s start date from the dates of significant events (eg cancelation), you can perform your analysis using those normalized day (or month) values.

Once you’ve done this, you can easily see the term for those subscribers who have cancelled. You can also calculate the odds of a member canceling in a given month. Once you have enough data for the results to be meaningful (look for normal distributions) then you can make an estimate of a subscriber’s lifetime (term).

Justin

Lenny

Thanks Dan and Andrew.

I wish there were more insights as to what he proposed for partnerships. I know there were some discussions on Dan’s experience on copywriting but how he managed to sell himself even to collaborate with a guru from the beginning intrigues me.
I’d be interested in tips or a cheat sheet on how he structured partnerships to be successful. I know there’s plenty of talented people but not many will put the work.

Thanks again

Dan Caron

Hi Lenny,

I met Rich Schefren at a marketing seminar – and we simply talked and had a few drinks. I had enough knowledge and experience that he was willing to take me on board. I think having small “wins” and continually snowballing them into bigger wins is key.

As far as partnerships, in the early days, I would take a percentage of gross revenue (as a marketer and copywriter). Now I prefer equity, since I’m doing more business building and I’m looking to create long-term assets that can be sold, as opposed to cash-flow.

Dan Caron

Andrew is a great interviewer, and he’s not afraid to ask tough questions. I went into the interview thinking I would be teaching people how to use lifetime value to grow their business, but Andrew had other plans. It was an engaging discussion and I hope you got value from it.

Dan Caron

Absolutely.

Dan Caron

This is a great tip Justin. I’ve always taken samples of customers from a given time period but I’ve never normalized start dates. I think we’ll have to build this into MemberMouse. Thanks for sharing.

Lenny

Thank you Dan. I appreciate it. Much success with your new venture.

http://www.stephaniesammons.com/ Stephanie Sammons

Dan, you did well. I was sitting there thinking “damn, he asks really tough questions!”

http://www.decalmarketing.com/adwords-book/ Iain Dooley

Hey guys, firstly Dan thanks for doing the interview! There were some great insights.

What you were saying about lifetime customer value and how that determines what you can spend on paid media echoes really closely what Juan Martitegui discusses in one of my favourite Mixergy Premium courses “how to blueprint your business”.

Basically he says that knowing his lifetime customer value *IS* his competitive advantage. He has a 160 day email follow up sequence and he knows that during that time, a certain number of people will buy, so he can spend like crazy on paid acquisition and no-one can come close to him.

I would have really loved to hear you talk more about that because you’re the only other person I’ve heard mention it specifically as a tool for creating competitive advantage. I was actually kind of disappointed that Andrew kept trying to drag you away from talking about that because I really wanted to hear your point of view.

Maybe you could come back and do a Mixergy Premium course *just* focused on lifetime customer value?

Thanks again.

http://www.decalmarketing.com/adwords-book/ Iain Dooley

This is kind of similar to what I did for an eCommerce client of mine. It was tricky because there is no “cancellation” as such, people will just not buy from you again. So what I did was take each purchase amount, and divide it by the number of days *since* they purchased, then calculated lifetime customer value as average dollar per day per customer.

The effect of people who buy once and never again approaches zero over time.

Dan/Justin if you have any feedback on that method I’d love to hear it!

Dan Caron

Iain,

I believe I met Juan a few years ago at Jeff Walker’s Product Launch Manager event. We never discussed lifetime value, but he seems like a great guy. I’ll have to take a look at his course. I would absolutely agree that lifetime value can (and should — in most cases) be used as your distinct competitive advantage. This is how you acquire all the traffic in your market, be it from banners, affiliate, cpc, or otherwise. Knowing your LCV allows you to know exactly how much you can afford to pay on the front-end, which gives you the ability to make intelligent decisions about how to purchase traffic. If you search Google for “MemberMouse Success Guide” you can find a PDF that I wrote on Lifetime Value. That should give you some additional insights.

Dan Caron

There are several ways lifetime value can be calculated, and the methods can vary quite a bit from business to business. As long as customer value is the lens in which you view and grow your marketing efforts (aside from producing the highest quality product possible) then you’re probably going to be making smart decisions. I’d say use whatever makes sense to you. It sounds like you’re on the right track.

Marcin

Dan, thanks for doing this interview. Two questions if you don’t mind:

1. Recently I noticed that more and more companies move to a membership site model only (all courses available for a montly fee; example: Mixergy) instead of offering multiple, seperate products (low price offer, medium price offer, high price offer, membership site and so on; example: Double Your Dating). What’s your advice on building sales funnels in information product business? Do you think funneling all your traffic to one, main membership site is the way to go or maybe it’s better to offer a range of products at different price points?

2. I live in Europe and I wondered if approaching an expert from US and setting up a partnership would work. What’s your experience on working with Paul Janka, do you think that a virtual cooperation can result in a successful 7 figure business?

Thanks once again!

Production Prints

Dan, isn’t there a cashflow management issue at hand when you spend money on advertising based on lifetime value? Lifetime value suggests you may have to wait a while to recoup your advertising cost, no?

Dan Caron

Marcin,

1.) I think there is a nice middle ground between the two models you describe. It’s useful to have fresh, timely products that act as customer acquisition entry points, but funnel into a membership back-end. That way, you can test new products out on the front-end, but you also have a consistent, and ever improving back end. The hardest thing to do is acquire a customer, so until you have a sales funnel that generates customers on a consistent basis, you’ll have to keep trying new front-end products, or repositioning your existing product. I would say that after years of doing this, the membership model is much easier to “maintain” and execute, especially with 1-click upsells inside the member’s area which helps to increase lifetime customer value.

2.) Yes, virtual businesses can certainly work. I work with partners overseas and in several different time zones, and the time differences can be challenging. It’s certainly not ideal, but the fact remains that building a team requires finding and working with people who have similar interests and talents, and the virtual organization is almost always the only viable way to make that happen. I wouldn’t spend much time worrying about the drawbacks as many people have built 7 figure virtual businesses.

Dan Caron

Yes! There are several different strategies you can use to deal with cash-flow considerations. You can try to run a cash-flow neutral model where your first sale goes to your media or affiliate payment. In this scenario you’re not going negative on the front-end, and are hopefully making a profit on the back end. But if you want to grow aggressively, you might be giving away 50% or more of your total lifetime value, and thus are probably going negative on the front-end, which will require either a) having a source of funding or b) having favorable “terms” with your media partners or affiliates. If you can pay net 30 or net 45, you can increase your acquisition cost and still be relatively cash-flow neutral. You can also reduce the time between billings. There are some membership models that bill the customer weekly (although I would not recommend it). I also know some guys use an American Express account to extend the available credit window they have, to allow for back-end profits to accumulate. I would say that explaining your business model to potential partners is important and will allow you to get good payment terms. That’s the approach I have found to be the most useful.

Marcin

Dan, thanks for your detailed reply Yes, the membership site model seems to be easier to execute & manage. Btw: what kind of upsells do you offer inside the member’s area? Coaching, seminars?

Dan Caron

I think relevancy is the key to upsells. The price doesn’t matter so much as offering a complementary product that really makes sense in the context of the sales process. For MemberMouse, we offer a quick-start setup service, and also a 7 Steps to 7 Figures teleseminar infoproduct.

Production Prints

Awesome, thanks for that!

http://SonicTruths.net Christopher Sutton

Dan: I’m working on estimating our LCV at the moment and using MemberMouse for our forthcoming membership site – thanks so much for linking to this guide! Can’t wait to dig in.

And thank you for such a terrific interview. I’m glad you kept on-topic about membership sites and customer acquisition rather than dive into dating niche specifics. I picked up some really useful pointers. Cheers!

Dan Caron

Thanks Chris. Stay tuned for some awesome LCV reports that will be available to MemberMouse clients in the very near future. LCV is not a complicated strategy, but it’s certainly one of the most reliable ways to grow your business.

http://mixergy.com Andrew Warner

Thanks. I can see how it would work, but I’m a bit obsessed with the True Mind project. I’ve never done anything that had such meaningful results.

James

Hey Andrew – you mentioned that you’re running Stripe with WLM. That isn’t a standard integration – how did you get it to work?

Kyle Patrick McCrary

I really don’t have much to say besides, “Thank you!!!” (To both of you grand fellas)
Watch this video, people.

KPM

Arie at Mixergy

Thanks, KPM

http://mixergy.com Andrew Warner

I think you’re right. Email WLM and let them know you want it.

Dan Caron

I like your style Kyle.

Kyle Patrick McCrary

Thanks, Dan. I do appreciate it.

Izzy

Dan,

What you said about people making copywriting seem like a mystical process where people “weave words into gold” really resonated with me. I personally have a very difficult time coming up with copy. I’m at the point where its probably the most important part of my business but I keep putting it off because I have a psychological barrier where I think I can’t write something effective and whatever I write will suck. I feel like the words I choose really need to be well thought out and written perfectly to work and make the conversion.

I run a service that promotes businesses through online sweepstakes/contests/giveaways etc. I’m trying to craft an email to send to companies that have already hosted giveaways on blogs to try and convince them to use my service in the future. Do you have any advice on how I should go about writing this or overcoming my barrier?

Would really appreciate any advice and wisdom.

Thanks,
Izzy

Izzy

Dan,

What you said about people making copywriting seem like a mystical
process where people “weave words into gold” really resonated with me. I personally have a very difficult time coming up with copy. I’m at the point where its probably the most important part of my business but I keep putting it off because I have a psychological barrier where I think I can’t write something effective and whatever I write will suck. I feel like the words I choose really need to be well thought out and written perfectly to work and make the conversion.

I run a service that promotes businesses through online sweepstakes/contests/giveaways etc. I’m trying to craft an email to send to companies that have already hosted giveaways on blogs to try and convince them to use my service in the future. Do you have any advice on how I should go about writing this or overcoming my barrier?

Would really appreciate any advice and wisdom.

Thanks,
Izzy

Dan Caron

Izzy,

I used to struggle with copywriting, and I know the exact feeling you’re having. However, effective copy is actually quite simple, and need not be full of hyperbole or exaggeration in order to be effective. The secret is to be relevant. You have to address the customer’s problems. That is where you start the conversation. Their problems. Not with your product, or what you need. Forget about yourself. If you don’t know precisely the problems that your prospects are facing on a day to day basis, they you won’t know what to say. If you talk to your prospects, literally, you can use the words they say to describe their problems and challenges as the basis for your sales copy. That’s how you stay on point and that’s how you become relevant in the mind of the prospect. Anything else is dead air.

Izzy

Dan,

Thanks so much for taking the time to respond. I believe I understand the customer’s problems pretty well. Should I be worrying about semantics such as the actual words used in an email or whether an email is too long or too short? Am I over thinking the copy?

Even though you are forgetting about yourself and trying to be relevant to your customer’s problems. There is a point in the conversation where you shift to your product. How do you make that shift effectively?

Sometimes I feel like I’m over thinking it and should just send something out… anything. It’s better than dilly dallying and wasting time. If there is anything you read or came across that helped you overcome your struggle with copywriting, please let me know. I need to get over this issue.

http://www.decalmarketing.com/adwords-book/ Iain Dooley

Hey Izzy, did you check out “The Brain Audit” that Dan mentioned in the interview? I read it after hearing him mention it in this interview and it’s REALLY good. It gives you the step-by-step progression you’re talking about: start with the problem, then formulate a trigger, overcome objections etc. It’s really solid stuff.

Also have you ever checked out copyhackers.com? Joanna has a couple of courses in Mixergy Premium and her eBooks are also really fantastic.

Dan Caron

Start with a basic outline (the prospect’s problems, then an overview of your solution and finally a call to action). Then flesh it out with bullet points. Then turn those bullet points into paragraphs. Then try to write basic sentences in the active voice. Eliminate weak or non-descriptive verbs (again, after you have the main ideas down). Avoid phrasal verbs like, “get rid of,” and simply say “eliminate.” Use future simple and past simple voice, which improves the clarity of your writing. If your product solves relevant problems, it will sell. If the problems are not important enough to the prospect, your product will not sell. No amount of verbal jiujitsu will solve that problem. Your job as a marketer is to produce content that supports sales. There is no such thing as writers block. You just have to do it. Once you get the basic outline done, it becomes easy and enjoyable to polish into a finished product. Good luck.

Izzy

Thanks for the huge help Dan, I’ll get to work!

Izzy

I did not check that book out but definitely will now. I also have never heard of copyhackers but will look into them as well. Thanks for sharing these resources.

Thanks Dan! One great interview with alot of value. Thanks again for sharing with the group.

Karen Tiede

Andrew–When you get done reading the Brain Audit, see if you can get Sean d’Souza on as an interview guest. He knows about building membership sites, pre-selling information products, online education, and lots more. Engaging interviewee. (Would really like to listen to this match up, myself, because he’s the first one of your (potential) guests I know outside of Mixergy.)